Sub-Advisory Agreement
This Agreement is made and entered into as of the 14th day of December,
2001, by and between Xxxxxxx Partners, Ltd., a Florida limited partnership (the
"Adviser") serving as investment adviser to the Xxxxxxx Plan, a Delaware
business trust (the "Trust"), and Fox Asset Management, LLC, a Delaware limited
liability company (the "Investment Manager").
WHEREAS, the Trust is a diversified, open-end management investment
company, registered under the Investment Company Act of 1940, as amended (the
"Act"), and authorized to issue multiple series and multiple classes of shares;
and
WHEREAS, effective as of September 30, 2001, Xxxxx Xxxxx Corp. (through a
wholly owned subsidiary) acquired 80% of the outstanding common stock of Fox
Asset Management, Inc., the current subadviser of the Xxxxxxx Plan Large/Mid-Cap
Value Fund (the "Portfolio").
WHEREAS, this change in control of the subadvisor resulted in an automatic
termination of the Portfolio's initial subadvisory agreement that was approved
by the Xxxxxxx Plan's Board of Trustees (the "Board") effective as of May 1,
1999.
WHEREAS, the Board approved an interim subadvisory agreement effective as
of August 3, 2001 which granted Fox authority to act as subadviser for the
Portfolio effective as of the date of the change of control of the Investment
Manager for a period not to exceed 150 days thereafter, pending shareholder
approval of a new subadvisory agreement with the Investment Manager.
WHEREAS, on December 14, 2001, a majority of the outstanding voting
securities of all classes of the Portfolio approved the new subadvisory
agreement with the Investment Manager,
WHEREAS, the Trust has engaged the Adviser to provide investment management
services to the Trust, and the Adviser desires to retain Investment Manager to
render certain investment management services to the Portfolio, and Investment
Manager is willing to render such services; and
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. OBLIGATIONS OF INVESTMENT MANAGER
(A) SERVICES. Investment Manager agrees to perform the following services
(the "Services") for the Portfolio: (1) manage the investment and
reinvestment of the Portfolio's assets; (2) continuously review, supervise,
and administer the investment program of each Portfolio; (3) determine, in
its discretion, the securities to be purchased, retained or sold (and
implement those decisions); (4) provide the Trust and Adviser with records
concerning Investment Manager's activities which the Trust is required to
maintain; and (5) render regular reports to the Trust's and Adviser's
officers and directors concerning Investment Manager's discharge of the
foregoing responsibilities. Investment Manager shall discharge the
foregoing responsibilities subject to the control
of the officers, directors, and trustees of the Adviser and the Trust and
in compliance with such policies as the trustees may from time to time
establish, and in compliance with the objectives, policies, and limitations
of the Portfolios set forth in the Trust's prospectus and statement of
additional information, as amended from time to time, and with all
applicable laws and regulations. All Services to be furnished by Investment
Manager under this Agreement may be furnished through the medium of any
directors, officers or employees of Investment Manager or through such
other parties as Investment Manager may determine from time to time.
Investment Manager agrees, at its own expense or at the expense of one or
more of its affiliates, to render the Services and to provide the office
space, furnishings, equipment and personnel as may be reasonably required
in the judgment of the Board of Trustees of the Trust to perform the
Services on the terms and for the compensation provided herein. Investment
Manager shall authorize and permit any of its officers, directors and
employees, who may be elected as directors or officers of the Trust, to
serve in the capacities in which they are elected. Except to the extent
expressly assumed by Investment Manager herein and except to the extent
required by law to be paid by Investment Manager, the Trust shall pay all
costs and expenses in connection with its operation and organization.
(B) BOOKS AND RECORDS. All books and records prepared and maintained by
Investment Manager for the Trust under this Agreement shall be the property
of the Trust and, upon request therefor, Investment Manager promptly shall
surrender to the Trust such of the books and records so requested.
(C) ASSUMPTION. For and in consideration of the Trust entering into this
Agreement, Investment Manager hereby agrees that from and after the
effective date set forth above, Investment Manager shall be liable for the
obligations of Fox Asset Management, Inc. arising prior to the effective
date for its actions under the initial and interim subadvisory agreements.
2. PORTFOLIO TRANSACTIONS.
Investment Manager is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and is
directed to use its best efforts to obtain the best net results as described in
the Trust's prospectus from time to time. Investment Manager may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Portfolio with research, analysis, advice and similar
services, and Investment Manager may pay to these brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, provided that Investment Manager determines in good
faith that such commission is reasonable in terms either of that particular
transaction or of the overall responsibility of Investment Manager to the Trust
and its other clients and that the total commission paid by the Trust will be
reasonable in relation to the benefits to the Portfolio over the long-term.
Investment Manager will promptly communicate to the officers and the directors
of the Adviser and Trust such information relating to portfolio transactions as
they may reasonably request.
3. COMPENSATION OF INVESTMENT MANAGER.
-2-
For its services rendered to the Portfolio, the Adviser will pay to Investment
Manager on the last day of each month a fee at an annual rate equal to 0.42% of
the first $10 million of the Portfolio's average daily net assets, 0.40% of the
next $5 million, 0.35% of the next $10 million, and 0.25% of the average daily
net assets in excess of $25 million. The fees described above shall be computed
daily based upon the net asset value of the Portfolio as determined by a
valuation made in accordance with the Trust's procedure for calculating
Portfolio net asset value as described in the Trust's Prospectus and/or
Statement of Additional Information. During any period when the determination of
the Portfolio's net asset value is suspended by the trustees of the Trust, the
net asset value of a share of the Portfolio as of the last business day prior to
such suspension shall, for the purpose of this Paragraph 3, be deemed to be net
asset value at the close of each succeeding business day until it is again
determined.
4. STATUS OF INVESTMENT MANAGER.
The services of Investment Manager to the Trust are not to be deemed exclusive,
and Investment Manager shall be free to render similar services to others so
long as it obtains the prior consent of the Trust to render such services, which
consent shall not be unreasonably withheld. It shall be conclusively presumed
that such consent shall be reasonably withheld in the event the Trustees find
that the services of the investment Manager to the Trust would be impaired by
such additional services. Investment Manager shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust. Nothing in this Agreement shall limit
or restrict the right of any director, officer or employee of Investment
Manager, who may also be a director, officer, or employee of the Trust, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
5. PERMISSIBLE INTERESTS.
Trustees, agents, and stockholders of the Trust are or may be interested in
Investment Manager (or any successor thereof) as directors, partners, officers,
or stockholders, or otherwise, and directors, partners, officers, agents, and
stockholders of Investment Manager are or may be interested in the Trust as
trustees, stockholders or otherwise; and Adviser (or any successor) is or may be
interested in the Trust as a stockholder or otherwise.
6. LIABILITY OF INVESTMENT MANAGER.
Investment Manager assumes no responsibility under this Agreement other than to
render the services called for hereunder in good faith. Investment Manager shall
not be liable for any error of judgment or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the Investment
Company Act of 1940), or a loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of, or from reckless disregard
by it of its obligations and duties under, this Agreement.
-3-
7. TERM.
This Agreement shall remain in effect until no later than December 14, 2003, and
from year to year thereafter provided such continuance is approved at least
annually by (a) the vote of a majority of the Board of Trustees of the Trust or
(b) a vote of a "majority" (as that term is defined in the Investment Company
Act of 1940) of the Trust's outstanding securities, provided that in either
event the continuance is also approved by the vote of a majority of the trustees
of the Trust who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person at
meeting called for the purpose of voting on such approval; provided, however,
that: (i) the Trust or Adviser may, at any time and without the payment of any
penalty, terminate this Agreement upon 60 days written notice to Investment
Manager; (ii) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); (iii)
Investment Manager may terminate this Agreement without payment of penalty on 60
days written notice to the Trust; and (iv) the terms of paragraph 6 of this
Agreement shall survive the termination of this Agreement.
8. NOTICES.
Except as otherwise provided in this Agreement, any notice or other
communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to Investment Manager: If to Adviser:
------------------------ -------------
Fox Asset Management, LLC Xxxxxxx Partners, Ltd.
00 Xxxxxxxx Xxxxxx 0000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxx Xxxxxx, XX 00000 Xxxxxx Xxxx, Xxxxxxx 00000
Attn: J. Xxxxx Xxxxxxxxxx, Manager Attn: Xxxxxx X. Ally
9. AMENDMENTS.
No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until approved by vote of the
holders of a majority of the Portfolio's outstanding voting securities.
-4-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
FOX ASSET MANAGEMENT, LLC
By: /s/ J. Xxxxx Xxxxxxxxxx
---------------------------------
J. Xxxxx Xxxxxxxxxx, Manager
XXXXXXX PARTNERS, LTD.
By: Covenant Funds, Inc.
Managing General Partner
By: /s/ Xxxxxx X. Ally
---------------------------------
Xxxxxx X. Ally, President
-5-
